Unaudited financial results of Nordic Fibreboard AS for the second quarter of 2020
Management report
Consolidated net sales for Q2 2020 were € 2.48 million from continuing operations (Q2 2019: € 3.48 million from continuing operations). The sales revenue of the Group`s main business segment, fibreboard, for Q2 2020 were € 2.43 million (Q2 2019: € 3.01 million). The main reason for this drop in sales was due to the closure of the Püssi factory in March 2020, which came about as a result of the loss of orders from customers within the display board industry caused by the COVID-19 pandemic. Furniture retail sales revenue for Q2 2020 were € 8 thousand, the decrease in sales (compared to Q2 2019: € 468 thousand) was due to the Group exiting the furniture retail segment earlier this year, with some remaining stock sales taking place during Q2 2020. Rental and property development sales, includes the resale of utilities, in Q2 2020 were € 44 thousand (Q2 2019: € 16 thousand). Revenue from rental and property development increased due to more tenants being secured for the premises in Suur-Jõe 48, Pärnu.
Group EBITDA for Q2 2020 was positive € 347 thousand from continuing operations (Q2 2019: € 52 thousand), of which the fibreboard division EBITDA was € 342 thousand (Q2 2019: € 13 thousand). After depreciation and interest, group net profit for Q2 2020 was € 194 thousand from continuing operations (Q2 2019 net loss of € 179 thousand from continuing operations).
The Group`s consolidated EBITDA has improved compared to the same period last year, the main reason being the much improved performance of the fibreboard division. The closure of the Püssi fibreboard factory enabled us to switch the Püssi factory construction sector orders to our Pärnu factory, and we started a 4th shift in Pärnu in April 2020 as a result thereof. The Pärnu factory is now running all the time, except for a one-shift maintenance stop every month. This has led to increased machine utilisation, and gross margin for Fibreboard has therefore increased substantially, being 31% in Q2 2020 (from being 15% in Q2 2019).
Divisional review
Revenue by business segments
| € thousand | € thousand | |||
| Q2 2020 | Q2 2019 | 6M 2020 | 6M 2019 | |
| Continued operations | ||||
| Fibreboards production and sales | 2,426 | 3,013 | 5,517 | 5,906 |
| Furniture retail | 8 | 468 | 55 | 861 |
| Real Estate Management | 44 | 16 | 113 | 16 |
| Group transactions | 0 | (18) | (0) | (20) |
| TOTAL from continued operations | 2,479 | 3,480 | 5,685 | 6,763 |
| Discontinued operations | 0 | 408 | 0 | 954 |
| TOTAL | 2,479 | 3,888 | 5,685 | 7,717 |
Profit by business segments
| € thousand | Q2 2020 | Q2 2019 | 6M 2020 | 6M 2019 |
| Continued operations | ||||
| EBITDA by business units: | ||||
| Fibreboards production and sales | 342 | 13 | 88 | 36 |
| Furniture retail | 8 | (16) | (39) | (38) |
| Real Estate Management | (1) | 16 | (3) | 16 |
| Group transactions | (2) | 39 | (9) | 50 |
| TOTAL EBITDA | 347 | 52 | 37 | 64 |
| Depreciation | 135 | 166 | 287 | 316 |
| TOTAL OPERATING PROFIT/ LOSS | 212 | (114) | (250) | (252) |
| Net financial costs | 18 | 65 | 90 | 129 |
| Income tax | 0 | 0 | 0 | 0 |
| NET PROFIT/ LOSS from continued operations | 194 | (179) | (340) | (381) |
| Net profit/loss from discontinued operations | 0 | (121) | 0 | (243) |
| TOTAL | 194 | (300) | (340) | (624) |
Nordic Fibreboard Ltd
Fibreboard sales in Q2 2020 were € 2.43 million (2019: € 3.01 million). We sold our products to customers in 18 countries during Q2 2020. The main reason for the drop in sales was the loss of display board customers, boards for this sector was produced in the Püssi factory, which we closed in March 2020. However, sales to our customers within the construction sector in our main northern European markets have been stable. Finland, our largest market with 29% of our fibreboard sales this year, were up 4% in Q2. Sales to Denmark, Sweden, Estonia, and Latvia, together accounting for 45% of sales in Q2, were flat, while we recorded sales decline in markets further afield mainly due to the negative effect in such markets caused by the corona virus.
By adding a 4th shift in our Pärnu production, and thus achieving full machine utilisation, has led to a strong increase in Fibreboard’s gross margin from being 15% in Q2 2019 to now reaching 31% in Q2 2020. Overhead costs for Q2 2020 was down 6% compared to Q2 2019, and EBITDA for Q2 2020 was thus positive € 342 thousand (14% of sales in Q2 2020), compared Q2 2019 EBITDA positive € 13 thousand.
FIBREBOARD SALES BY GEOGRAPHICAL SEGMENTS
| € thousand | € thousand | |||
| Q2 2020 | Q2 2019 | 6M 2020 | 6M 2019 | |
| European Union | 2,115 | 2,236 | 4,856 | 4,329 |
| Russia | 276 | 425 | 486 | 753 |
| Asia | 22 | 80 | 60 | 243 |
| Africa | 0 | 156 | 34 | 298 |
| Middle East | 6 | 39 | 45 | 126 |
| Other | 7 | 77 | 36 | 157 |
| TOTAL | 2,426 | 3,013 | 5,517 | 5,906 |
SKANO FURNITURE: RETAIL SALES
Furniture retail sales in Q2 2020 were € 8 thousand (2019 Q2 € 468 thousand). However, this business has been closed down, as earlier informed, and the sales recorded in Q2 2020 was from some remaining stock.
RETAIL SALES BY COUNTRIES
| € thousand | € thousand | Number of stores | ||||
| Q2 2020 | Q2 2019 | 6M 2020 | 6M 2019 | 30.06.2020 | 30.06.2019 | |
| Estonia | 8 | 364 | 55 | 621 | 0 | 3 |
| Latvia | 0 | 45 | 0 | 85 | 0 | 1 |
| Lithuania | 0 | 59 | 0 | 155 | 0 | 1 |
| TOTAL (ongoing shops) | 8 | 468 | 55 | 861 | 0 | 5 |
PÄRNU RIVERSIDE DEVELOPMENT
Rental income, including the resale of utilities, was € 44 thousand in Q2 2020. We incurred operational costs and costs associated with the ongoing detail planning application, which resulted in negative EBITDA of € 3 thousand for Q2 2020.
STATEMENT OF FINANCIAL POSITION AND CASH FLOW STATEMENT
As of 30.06.2020 the total assets of Nordic Fibreboard AS were € 8.1 million (30.06.2019: € 10.3 million). The liabilities of the company as of 30.06.2020 were € 6.9 million (30.06.2019: € 8.0 million), of which Group has borrowings of € 4.5 million as at 30.06.2020 (30.06.2019: € 4.9 million).
Receivables and prepayments amounted to € 1.2 million as at 30.06.2020 (30.06.2019: € 1.8 million). Inventories were € 0.4 million as of 30.06.2020 (30.06.2019: € 1.7 million). Investment property increased due to reclassification from € 187 thousand as at 30.06.2019 to € 1.1 million as at 30.06.2020. Financial investments (i.e. Trigon Property Development shares) increased from € 399 thousand as at 30.06.2019 to € 414 thousand as at 30.06.2020. Property, plant, equipment and intangibles were € 4.9 million as of 30.06.2020 (€ 6.2 million as of 30.06.2019).
During 2020 6M, the Group’s cash flows from operating activities totalled cash inflow of € 104 thousand (2019 6M: cash outflow € 207 thousand). Investment activities resulted in cash outflows in amount of € 53 thousand during 2020 6M, compared to outflows in amount € 46 thousand during 6M 2019. Financing activities also resulted in cash outflows of € 53 thousand during 6M 2020 (2019 6M: cash outflow € 145 thousand). Net cash effect during 2020 6M showed cash outflows of € 2 thousand, (2019 6M: cash inflows € 16 thousand).
Outlook
Nordic Fibreboard LTD
The order book from our traditional customers in our largest markets in northern Europe remains strong, although it is very difficult to predict what will happen in the future due to the continuing uncertainty surrounding the COVID-19 pandemic.
Pärnu Riverside Development
We will continue to manage and develop the property on Suur-Jõe Street 48, Pärnu.
People
On the 30th of June 2020, the Group employed 97 people (compared to 124 people as of 30.06.2019 from continuing operations). The average number of personnel in Q2 2020 was 116 (Q2 2018: 121 from continuing operations).
For six months of 2020, wages and salaries with taxes amounted to € 1.1 million from continuing operations (six months 2019: € 1.2 million from continuing operations). Payments made to management board members of all group companies including all subsidiaries with relevant taxes were € 104 thousand during 6M 2020 and € 110 thousand during 6M 2019.
FINANCIAL HIGHLIGHTS
| € thousand | ||||
| Income statement | Q2 2020 | Q2 2019 | 6M 2020 | 6M 2019 |
| Revenue | 2,479 | 3,480 | 5,685 | 6,763 |
| EBITDA | 347 | 52 | 37 | 64 |
| EBITDA margin | 14% | 1% | 1% | 1% |
| Operating profit | 211 | (114) | (250) | (252) |
| Operating margin | 9% | (3%) | (4%) | (4%) |
| Net profit | 194 | (179) | (340) | (381) |
| Net margin | 8% | (5%) | (6%) | (6%) |
| Discontinued operations | 0 | (121) | 0 | (243) |
| TOTAL NET PROFIT | 194 | (300) | (340) | (624) |
| Statement of financial position | 30.06.2020 | 31.12.2019 | 30.06.2019 | 31.12.2018 |
| Total assets | 8,077 | 9,045 | 10,281 | 10,307 |
| Return on assets | 2% | (12%) | (4%) | (3%) |
| Equity | 1,222 | 1,542 | 2,297 | 2,901 |
| Return on equity | 16% | (73%) | (17%) | (12%) |
| Debt-to-equity ratio | 85% | 83% | 78% | 72% |
| Share | 30.06.2020 | 31.12.2019 | 30.06.2019 | 31.12.2018 |
| Last Price* | 0.32 | 0.41 | 0.44 | 0.36 |
| Earnings per share | (0.08) | (0.31) | (0.14) | (0.20) |
| Price-earnings ratio | (4.26) | (1.32) | (3.15) | (1.81) |
| Book value of a share | 0.27 | 0.34 | 0.51 | 0.64 |
| Market to book ratio | 1.19 | 1.20 | 0.85 | 0.56 |
| Market capitalization, € thousand | 1,449 | 1,845 | 1,962 | 1,611 |
| Number of shares, piece | 4,499,061 | 4,499,061 | 4,499,061 | 4,499,061 |
EBITDA = Earnings before interest, taxes, depreciation and amortization
EBITDA margin = EBITDA / Revenue
Operating margin = Operating profit / Revenue
Net margin = Net profit / Revenue
Return on assets = Net profit / Total assets
Return on equity = Net profit / Equity
Debt-to-equity ratio = Liabilities / Total assets
Earnings per share = Net profit / Total shares
Price-earnings ratio = Last price / Earnings per share
Book value of a share = Equity / Total shares
Market to book ratio = Last price / Book value of a share
Market capitalization = Last price * Total number of shares
*
Consolidated statement of financial positions
| € thousand | 30.06.2020 | 31.12.2019 | 30.06.2019 | 31.12.2018 |
| Cash and cash equivalents (Note 2) | 5 | 7 | 70 | 54 |
| Receivables and prepayments (Note 3) | 1,175 | 1,394 | 1,764 | 1,142 |
| Inventories (Note 4) | 443 | 894 | 1,679 | 2,255 |
| Total current assets | 1,623 | 2,296 | 3,513 | 3,452 |
| Investment property (Note 5) | 1,125 | 1,121 | 187 | 175 |
| Available-for-sale financial assets (Note 8) | 414 | 397 | 399 | 422 |
| Property, plant and equipment (Note 6) | 4,902 | 5,212 | 6,155 | 6,223 |
| Intangible assets (Note 7) | 13 | 19 | 27 | 34 |
| Total non-current assets | 6,454 | 6,749 | 6,769 | 6,855 |
| TOTAL ASSETS | 8,077 | 9,045 | 10,281 | 10,307 |
| Borrowings (Notes 9) | 4,462 | 4,547 | 602 | 662 |
| Payables and prepayments (Notes 10) | 2,158 | 2,665 | 2,874 | 2,418 |
| Short-term provisions (Note 11) | 9 | 20 | 10 | 15 |
| Total current liabilities | 6,629 | 7,232 | 3,487 | 3,095 |
| Long-term borrowings (Notes 9) | 47 | 92 | 4,288 | 4,102 |
| Long-term provisions (Note 11) | 179 | 179 | 210 | 210 |
| Total non-current liabilities | 226 | 271 | 4,498 | 4,311 |
| Total liabilities | 6,855 | 7,503 | 7,985 | 7,406 |
| Share capital (at nominal value) (Note 12) | 2,699 | 2,699 | 2,699 | 2,699 |
| Share premium | 0 | 364 | 364 | 364 |
| Statutory reserve capital | 0 | 288 | 288 | 288 |
| Other reserves | 104 | 84 | 65 | 45 |
| Unrealised currency differences | 0 | 0 | 0 | 0 |
| Retained earnings (loss) | (1,582) | (1,894) | (1,119) | (496) |
| Total equity | 1,222 | 1,542 | 2,297 | 2,901 |
| TOTAL LIABILITIES AND EQUITY | 8,077 | 9,045 | 10,281 | 10,307 |
*The notes to the financial statements presented on pages 15 to 31 are an integral part of these consolidated financial statements.
Consolidated statement of profit or loss and other comprehensive income
| € thousand | Q2 2020 | Q2 2019 | 6M 2020 | 6M 2019 |
| Revenue (Note 14) | 2,479 | 3,480 | 5,685 | 6,763 |
| Cost of goods sold (Note 15) | 1,798 | 2,963 | 4,617 | 5,846 |
| Gross profit | 681 | 517 | 1 068 | 917 |
| Distribution costs (Note 16) | 306 | 455 | 733 | 857 |
| Administrative expenses (Note 17) | 129 | 131 | 304 | 255 |
| Other operating income (Note 19) | 1 | 0 | 2 | 22 |
| Other operating expenses (Note 19) | 35 | 45 | 283 | 79 |
| Operating profit (loss) | 212 | (114) | (250) | (252) |
| Finance income (Note 20) | 36 | 0 | 37 | 0 |
| Finance costs (Note 20) | 54 | 65 | 127 | 129 |
| PROFIT (LOSS) BEFORE INCOME TAX | 194 | (179) | (340) | (381) |
| NET PROFIT (LOSS) FOR THE PERIOD FROM CONTINUING OPERATIONS | 194 | (179) | (340) | (381) |
| Net profit (loss) for the period from discontinuing operations | 0 | (121) | (0) | (243) |
| NET PROFIT (LOSS) FOR THE PERIOD | 194 | (300) | (340) | (624) |
| TOTAL COMPREHENSIVE PROFIT (LOSS) FOR THE PERIOD | 194 | (300) | (340) | (624) |
| Basic earnings per share (Note 13) | 0.04 | (0.07) | (0.08) | (0.14) |
| Diluted earnings per share (Note 13) | 0.04 | (0.07) | (0.08) | (0.14) |
*The notes to the financial statements presented on pages 15 to 31 are an integral part of these consolidated financial statements.
Consolidated statement of changes in equity
| € thousand | Share capital | Share premium | Statutory reserve capital | Other reserves | Retained earnings | Total |
| Balance at 31.12.2018 | 2,699 | 364 | 288 | 45 | (496) | 2 901 |
| Share options 6M 2019 | 0 | 0 | 0 | 20 | 0 | 20 |
| Net loss for 6M 2019 | 0 | 0 | 0 | 0 | (624) | (624) |
| Other comprehensive income for 6M 2019 | 0 | 0 | 0 | 0 | 0 | 0 |
| Total comprehensive loss for 6M 2019 | 0 | 0 | 0 | 0 | (624) | (624) |
| Balance at 30.06.2019 | 2,699 | 364 | 288 | 65 | (1,119) | 2,297 |
| Balance at 31.12.2019 | 2,699 | 364 | 288 | 84 | (1,894) | 1,542 |
| Share options 6M 2020 | 0 | 0 | 0 | 20 | 0 | 20 |
| Other changes | 0 | (364) | (288) | 0 | 652 | 0 |
| Net loss for 6M 2020 | 0 | 0 | 0 | 0 | (340) | (340) |
| Other comprehensive income for 6M 2020 | 0 | 0 | 0 | 0 | 0 | 0 |
| Total comprehensive loss for 6M 2020 | 0 | 0 | 0 | 0 | (340) | (340) |
| Balance at 30.06.2020 | 2,699 | 0 | 0 | 104 | (1,582) | 1,222 |
*The notes to the financial statements presented on pages 15 to 31 are an integral part of these consolidated financial statements.
TORFINN LOSVIK
Chairman of the board
Phone:
Attachment
